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CONTINUED: Filling Vacant Retail Boxes Requires Thinking Outside The Box
<br />they look to generate at least some income while they continue to search for a permanent tenant.
<br />However, the number of potential tenants in this category continue to be limited, said our experts.
<br />"At malls, this is called 'specialty leasing', and often these tenants can help lead to growth as they're
<br />converted into permanent tenants. However, the specialty leasing world has been hit with the rest of the
<br />leasing world in the scramble to find appropriate retailers for space," said Bemis.
<br />Williams said that in some very short-term temporary leasing situations, landlords are willing to take a
<br />straight percentage of sales in lieu of rent. In the holiday goods category, he said Excess Space does
<br />about 50 Halloween store leases every year.
<br />TRADITIONAL TENANTS
<br />Surprisingly, there are still a few traditional tenants expanding, the deals are just fewer and farther
<br />between. Some categories continue to plug along with expansion, however.
<br />Discounters are the standout across the board named by all interviewees. Dollar stores (this category is
<br />widespread from small shop local and franchised stores to the likes of Dollar Tree, Dollar General and
<br />Family Dollar), discount grocers (Aldi, Save-A-Lot, etc), big-box discounters (Target, Wal-Mart), wholesale
<br />clubs (Costco, BJ's, Sam's Club), and off-price brand retailers (T] Maxx, Marshalls, Ross Dress for Less,
<br />etc) were identified.
<br />Other common uses continuing to sign leases over the last six months include wireless phone/mobile
<br />device retailers (at least 350 leases in the last six months), video game retailers (at least 150 leases over
<br />the last six months), quick service restaurants (at least 800 leases signed in the last six months), drug
<br />stores, wine/liquor/cigar shops (38, 42, and 29 leases in the last six months, respectively), tax preparers,
<br />insurance (at least 150 leases over the last six months), real estate/construction (yes that's right, at least
<br />85 leases were signed in the last six months), doctor's offices/clinics (at least 120 leases over the last six
<br />months), medical supply retailers, hobby/craft retailers (approx. 50 leases over last six months), pet
<br />care/supplies (at least 60 leases over the last six months), salons/spas (at least 375 leases signed over
<br />the last six months), massage/ acupuncture (at least 80 leases over the last six months), financial
<br />services (at least 75 leases over the last six months), beauty supply (at least 80 leases over the last six
<br />months), copy/ship, sign makers, rental centers (at least 60 leases over the last six months), and more.
<br />For more guidance on specific retailer names,please refer to the table at the end of this story listing
<br />tenants that have signed at least four or more leases over the last six months, and the average square
<br />footage they leased.
<br />ISSUES IN ALTERNATIVE TENANTING / BACKFILLING SPACE
<br />EXCLUSIVE USE / CO-TENANCY RESTRICTIONS
<br />"For the most part, when you approach department stores to discuss use issues, they tend to be realistic
<br />about what's going on. They want a big traffic generator and don't want ahalf-vacant mall," explained
<br />Bemis. That said, restrictions can -- and do-- apply. Consignment or other second-hand stores are usually
<br />ruled out and off-price brand retailers are sometimes ruled out at malls because department stores won't
<br />give in on lease prohibitions against the sale of such products.
<br />Most of the experts we interviewed said exclusive-use issues almost always arise when a center is
<br />anchored by a grocery store that protests the sale of grocery items by a discounter or dollar store tenant,
<br />for example.
<br />"Co-tenancy is a problem," confirms the Coreland Companies' Hammond. "Most anchor tenants have
<br />clauses in the lease that state either (i) only a certain amount of square footage can be non-traditional
<br />retail in the center or (ii) it has to be a certain distance from their premises. This is largely due to the
<br />tenant wanting to have strong co-tenants (i.e. other retailers who help their sales) and to prevent a gym
<br />or school opening next door that could impact their parking," he added.
<br />Copyright (c) 2009 Costar Realty Information, Inc. All rights reserved.
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